MICHELLE JACQUELINE ZIS As Executor of the Estate of the late GLADYS CAMERON NICHOLLS

Testator's family maintenance - Inadequate provision made for proper maintenance, support and advancement in life of widower - Small estate - No provision made in testator's will for the widower to occupy the family home

Inheritance (Family and Dependants Provision) Act 1972 s 6

Order made making additional provision out of the estate for the plaintiff

White v Barron [1980] HCA 14; (1980) 144 CLR 431

1 PULLIN J: This is the plaintiff's application brought under the provisions of the Inheritance (Family and Dependants Provisions) Act 1972. The plaintiff is the widower of Gladys Cameron Nicholls, who died on 18 December 1998. Probate of Mrs Nicholls' will was granted on 27 March 2000.

2 Mr Nicholls claims that the will of Mrs Nicholls does not provide adequate provision for his proper maintenance, support or advancement in life, and that further provision ought to be made for him out of the estate.

3 Mrs Nicholls is survived by two daughters, who are named as the second and third defendants. The second defendant, Ms Zis, was born on 24 October 1957 and the third defendant, Ms Westerhausen, was born on 28 April 1952.

4 The will of the deceased is dated 20 November 1998. Ms Zis was appointed to be the executor and trustee of the will. Under the will, real property was given to the trustee with a direction to sell and distribute the proceeds as follows:

(a) Pay all reasonable costs associated with the sale of the property.

(b) One third of the proceeds to be paid to Mr Nicholls.

(c) One third of the proceeds to be paid to Ms Zis.

(d) One third of the proceeds to be paid to Ms Westerhausen.

5 Furniture and china that belonged to Mrs Nicholls' mother was given to Ms Westerhausen and Ms Zis in equal shares, and the residue, including all moneys held in bank accounts, was given to her daughters in equal shares.

6 The value of the estate at the date of Mrs Nicholls' death according to the statement of assets and liabilities filed in the probate division was as follows:

Home Building Society account number 3831494013 $19,056.62

Home Building Society account number 2013255040 3,581.59

7 The value of the Falcon property was not a value arrived at by a valuer, but it is the only evidence on the point and therefore I will accept it. At the date of the hearing, the parties agreed that the value of the Falcon property was between $105,000 and $115,000. As at the date of the hearing, the Home Building Society accounts had been closed and the proceeds paid into the trustee's solicitor's trust account. The balance is a little above $20,000 after payment of funeral expenses and other expenses. It is Mr Nicholls' contention that the failure to provide him with the right to continue living in 36A Mercedes Avenue, Falcon meant that adequate provision was not made for his proper maintenance, support or advancement in life.

8 The first question to be considered by a court on an application of this kind is, whether the disposition of the estate by the deceased was not such as to make adequate provision for the proper maintenance, support, education or advancement in life of the claimant. This is a question which is to be determined at the date of death of the deceased. If that question is answered in the affirmative, the Court must then exercise its discretion to make such provision as it thinks fit, taking into account the relevant facts as they exist at the time of making the order; Bondelmonte v Blanckensee [1989] WAR 305 at 307 and Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201.

9 In making an assessment about whether the provision made was inadequate for the proper maintenance, support or advancement in life of the applicant, regard must be had to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased, and the relationship between the deceased and other persons who have legitimate claims upon her bounty.

10 The determination of the second stage, should it arise, involves similar considerations. The first question raises a question of fact, notwithstanding that it involves the exercise of value judgments. The evaluative character of the decision stems from the fact that the Court must determine whether the applicant has been left without adequate provision for his or her proper maintenance, support and advancement in life. Singer v Berghouse (supra) at 209 - 210 per Mason CJ, Deane and McHugh JJ.

11 What is "proper" must be determined in the light of all the circumstances of the case. The amount to be provided is not to be measured solely by the need of maintenance, support or advancement. It would be so if the Court were concerned merely with adequacy, but the Court has to consider what is proper maintenance, and therefore the property left by the testator has to be taken into consideration. Bosch v Perpetual Trustee Co Ltd [1938] AC 463.

12 To achieve what is seen to be the legislative intention and to bring some certainty into an application of the Inheritance (Family and Dependants Provisions) Act 1972, the courts have developed principles and standards which have been applied in determining applications under the legislation. One such principle or standard is the provision a just and wise testator would have thought it his or her moral duty to make in the interests of the claimant had he or she been fully aware of all the relevant circumstances. Permanent Trustee Co Ltd v Fraser (1995) 36 NSWLR 24 per Sheller JA at 46.

13 A court must be very careful not to substitute notions of morality (for example, in the sense of disqualifying personal conduct such as sexual acts or drinking habits) for the purposes of the Act. Permanent Trustee Co Ltd v Fraser (supra) per Kirby P, page 29. The purpose of the jurisdiction is not the correction of the hurt feelings or sense of wrong of the competing claimants upon the estate of the testator.

14 In the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse is provided with a place to live, appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse should be provided as well with a fund to meet unforeseen contingencies. Golosky v Golosky, unreported; NSW Court of Appeal; 5 October 1993 per Kirby J, Luciano v Rosenblum (1985) 2 NSWLR 65. This is not an inflexible rule. It is simply a matter for consideration. See Golosky v Golosky (supra), per Kirby J.

15 Proper respect must be paid to the right of testamentary disposition, which is the fundamental premise upon which the provisions of the Act is based. The premise requires that the Court, out of respect for the continuing right of testamentary disposition, should limit its disturbance of the testator's will to that which is necessary to achieve the purposes of the Act, and not more. Pontifical Society for the Propagation of the Faith v Scales [1962] HCA 19; (1962) 107 CLR 9 at 19.

16 When Mr and Mrs Nicholls met, Mr Nicholls worked at Dowell Aluminium Windows as a floorman. In 1973, when they married, they lived in a house owned by Mrs Nicholls at 2 Waldon Street, Wilson. At the time of their marriage, the plaintiff owned a house at 13 Pinedale Street, East Victoria Park. He sold the house in the late 1970s for $13,000.

17 In 1982 they separated. Mr Nicholls moved into a caravan park. A few months after that, he retired from his position at Dowell.

18 At the end of 1982, the couple reconciled, and on 18 March 1983 they purchased a house at 36A Mercedes Avenue, Falcon as joint tenants in equal shares. They lived in this house until Mrs Nicholls died, and it is where Mr Nicholls still lives.

19 The purchase price of the Falcon property was $33,500, plus fees. There is some dispute about how this property was paid for. In a statutory declaration made by Mrs Nicholls before she died, she said that she provided the funds for the Falcon property. She said that the funds were the proceeds of sale of her Wilson property. Mr Nicholls, however, says, and I find, that he paid $23,000 (part of which was his superannuation pay-out and part of which came from the sale of assets) and $11,000 was borrowed from the Commonwealth Bank as a bridging loan. In about July 1983, Mrs Nicholls sold the Wilson house for $37,000, producing net proceeds of about $31,000. The Commonwealth Bank loan was then discharged from this fund, leaving Mrs Nicholls with about $20,000. $18,000 was put into an account in their joint names in the Home Building Society, and $1,000 was put into separate accounts which Mr and Mrs Nicholls operated.

20 The Home Building Society investment account produced interest which was paid into another joint account, which was then used to pay for holidays and expenses such as rates, taxes and insurance. The couple shared all other expenses of living, save for motor vehicle, boat and caravan expenses which Mr Nicholls paid. They had separate pension accounts and kept discretionary spending money separate.

21 Since 1983, Mr Nicholls has contributed to the painting of the house, maintained the house, erected a small shed and paid for awnings and kitchen cupboards.

22 In December 1984, Mrs Nicholls asked Mr Nicholls to convert their interest in the Falcon property into a tenancy in common in equal shares. Mr Nicholls did not understand the significance of this. This change was made.

23 Then in 1991, Mrs Nicholls asked that the house be transferred into her name. Mr Nicholls expected that he would die first, but if Mrs Nicholls died first, his expectation was that she would leave the home to him and thereafter he would leave the home to her daughters. There was further discussion about what would happen if Mrs Nicholls died first. Mr Nicholls was worried that the joint account would be frozen until probate was granted and that he would have no moneys available to him in that time. It was then agreed that the joint investment account at the Home Building Society would be transferred into Mr Nicholls' name. This happened, and interest was still paid into the other joint account which was used for meeting joint expenses.

24 Ms Westerhausen and Ms Zis say that from time to time they saw Mr Nicholls being abusive and bullying towards their mother. Ms Zis says she saw no affection between them. Mrs Nicholls made no such complaints in her statutory declaration. I do not consider that it is necessary for me to make any finding about this aspect. I say that because it is clear that there were many aspects of their life together that Mr and Mrs Nicholls enjoyed. They went crabbing and fishing together, they holidayed together in the north of the state and they both enjoyed socialising at the local bowling club. Ms Zis acknowledges that Mrs Nicholls did love Mr Nicholls when they married.

25 There was some issue raised in the proceedings about whether Mr Nicholls was impotent or not and whether he said he would or would not seek medical attention for this. Mr Nicholls denies that he was impotent, and I accept that evidence. In any event, I see this area of evidence as being of no significant relevance to the proceedings.

26 Mrs Nicholls developed heart disease and had a serious heart attack in the early 1990s. She was quite ill for the last months of her life, and Mr Nicholls performed the housework, did most of the cooking, nursed her and gave up his bowling to look after her.

27 The couple discussed Mrs Nicholls' will. Mrs Nicholls said to Mr Nicholls that she had made a will leaving the house to Mr Nicholls for life and then to her daughters after his death. The will was again discussed shortly before her death. She told Mr Nicholls said that she had changed her will so that when the house ceased to be his permanent address, it would be sold and split three ways.

28 Mr Nicholls was 81 when Mrs Nicholls died. His financial circumstances, which are set out in an affidavit filed shortly before the hearing, are not significantly different from the position at the date of Mrs Nicholls' death. At the present time, his income consists of a war veterans and disability pension which provides him with $498.44 per fortnight and he has three bank accounts containing amounts totalling approximately $16,000 (which has been reduced to that amount because he has paid approximately $12,000 on legal fees). He owns a 1975 Kingswood motor vehicle and furnishings and personal effects worth less than $15,000. The money in the bank accounts consists in the main of the moneys which he received when the joint Home Building Society investment account was transferred into his name. This stood at around $19,000 at the time of Mrs Nicholls' death.

29 According to the life expectancy tables produced by the Australian Bureau of Statistics, at 83 years old Mr Nicholls has a life expectancy of 5.87 years.

30 Mr Nicholls says that he has good health for his age. However, he has arthritis in his knees. He is restricted in his ability to walk and he uses a walking stick. He is somewhat deaf and has to wear a hearing aid. His desire is to live in the Falcon house until he is no longer able to do so.

Did the Will Make Adequate Provision for the Proper Maintenance, Support or Advancement in life of the Plaintiff?

31 The estate is a small one, and Mrs Nicholls correctly had in mind the need to make provision in her will for her husband and her two daughters. Mrs Nicholls would have noted that none of that group were financially well off. All three are pensioners. Ms Zis has problems with her health, as does Ms Westerhausen. Both of Mrs Nicholls' daughters own their own home. Mrs Nicholls would have noted that Mr Nicholls had lived in their Falcon home for about 15 years and that if she did not give him any right to live in the home after her death, then Mr Nicholls would have to look for alternative accommodation.

32 Although Mrs Nicholls did attempt to discharge her duty to make provision for her husband and two daughters, I am of the opinion that she did not make adequate provision from her estate for the proper maintenance, support or advancement in life of Mr Nicholls. In my opinion, a wise and just testator would not have considered that adequate provision was made from the estate for the proper maintenance, support or advancement in life of Mr Nicholls by requiring the sale of the Falcon house and the provision of one third of the proceeds to Mr Nicholls.

Exercise of the Discretion Vested in the Court

33 As I have already mentioned, Ms Westerhausen and Ms Zis are not well off financially. They each receive a pension of $416.30 per fortnight. Each owns her own home. Each owns an old motor vehicle. Ms Zis has approximately $11,600 in cash in her bank account. Ms Westerhausen has no cash reserves. Neither of them have dependants and neither are married.

34 The will provided them with some immediate cash because the residue of the estate, which included the bank accounts, passed to them. Unfortunately most, or all, of this will now go in legal fees.

35 Taking into account the small size of the estate and the position of all those to whom Mrs Nicholls owed a duty, I consider that Mr Nicholls should be permitted to continue to occupy the Falcon home for so long as it is his principal place of residence. When it ceases to be his principal place of residence, the property should be sold. The proceeds of the sale should then be distributed to Ms Westerhausen, Ms Zis and Mr Nicholls (in the proportions set out below) if Mr Nicholls lives for 90 days after the property ceases to be his principal place of residence. If Mr Nicholls dies while he lives in the Falcon home or within 90 days of the property ceasing to be his principal place of residence, then the proceeds of sale should be divided equally between Ms Westerhausen and Ms Zis.

36 The effect of this decision will be to hold Ms Westerhausen and Ms Zis out of the one third share of the proceeds of the sale of the home while it remains Mr Nicholls' principal place of residence. In my view, this requires a reduction to Mr Nicholls' share of the proceeds of sale if he becomes entitled to it. In deciding what that reduction should be, I take into account the fact that if Mr Nicholls is unable to continue to live in the home, then it is likely that he will have to live in aged care accommodation. There was no evidence as to the cost of aged care accommodation, but I consider that he should have some money from the proceeds of sale of the Falcon home to supplement his other meagre resources to meet contingencies. In my view, if he is unable to continue to live in the home, then upon sale, and if he survives for 90 days after the home ceases to be his principal place of residence, he should receive 20 per cent of the net proceeds and Ms Westerhausen and Ms Zis should each receive 40 per cent of the net proceeds.